Archive for March, 2011

More Broadcast Vendor M&A: The Carlyle Group Acquires The Foundry from Advent Venture Partners

Broadcast Vendor M&A | Posted by Joe Zaller
Mar 15 2011

The Carlyle Group announced that is has acquired a “significant majority stake” in The Foundry, a UK-based visual effects software specialist, from Advent Venture Partners. As part of the deal, The Foundry’s founders and management will retain a significant minority stake in the business.

Although terms of the transaction were not disclosed, an article in the Financial Times newspaper says that that The Foundry was estimated to be worth “more than £75m ($120m)”.  If this valuation is correct, Advent Venture Partners has made a tidy profit since backing a management buyout at The Foundry less than two years ago.  This is the third broadcast industry deal for Advent in the past couple of years.  The UK-based venture fund sold its majority in Snell & Wilcox to Lloyd’s Development Capital in 2009, and retained a minority interest in Snell.  In 2010 Advent invested in ingest and transcoding vendor AmberFin.

The Foundry has experienced strong growth since the Advent-funded management buyout in June 2009, driven by demand for its visual effects software.  Since that time, the company’s headcount has tripled to more than 100 staff, and its revenue has more than doubled to £14.9m ($23.8m).  Today, The Foundry has more than 4,000 customers including The Moving Picture Company (MPC), Prime Focus, Dreamworks, Industrial Light and Magic (ILM), Framestore, Cinesite, Double Negative and several other high-end facilities.

Carlyle, which funded the acquisition through its “Carlyle Europe Technology Partners (CETP) II” fund, has acquired and invested in 20 companies, supporting their growth, expansion and business transformation initiatives in the technology space.  Carlyle says it plans to will support The Foundry’s expansion and continue to invest in its specialized product offerings while diversifying into adjacent market areas.

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Related Content:

Press release: The Carlyle Group to Acquire Visual Effects Software Developer The Foundry from Advent Venture Partners

Advent Ventures exits Snell & Wilcox in a merger worth £72million and retains stake in newly-created global force in broadcasting technology

AmberFin Closes Funding Round — Fourth Transcoding-Related Transaction in Past Few Months

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The 2011 Big Broadcast Survey – Now Available

broadcast industry technology trends, broadcast industry trends, Broadcast technology channel strategy, broadcast technology market research, Broadcast Vendor Brand Research, Top Broadcast Vendor Brands | Posted by Joe Zaller
Mar 10 2011

After many months of work, I am pleased to announce that the 2011 Big Broadcast Survey (BBS) has been completed, and that reports from the study will be published soon.

If you’re not familiar with the BBS, it’s an annual demand-side study of the global broadcast industry. BBS reports help readers improve their strategic decision making, customer engagement, marketing strategy, product planning, and sales execution.

More than 8,000 broadcast professionals in 100+ countries participated in the 2011 BBS, making it by far the largest and most comprehensive market study of the broadcast industry.

Three types of reports are available:

  • The BBS Global Market Report is the broadcast industry’s first global demand-based study of the purchasing habits of technology buyers.  This report examines industry trends, major projects being planned, products being evaluated for purchase, current and future plant infrastructure and operational structure, broadcast technology budgets, and HD upgrade plans for a wide variety of products.

 

  • BBS Global Brand Reports are available for more than 100 broadcast technology vendors.  These reports provide deep insight into how each company is perceived by the market, along with comprehensive benchmarking of broadcast technology vendors on a wide variety of metrics, through a series of league table rankings

 

  • Twenty-six separate 2011 BBS Product Reports provide detailed vendor brand ranking for individual product categories. These reports enable users to benchmark their brand directly against specific competitors through a detailed understanding of the opinions of technology buyers who purchase, specify or use each product type.  

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If you would like information about these reports and how they can help your business, please get in touch.

In addition to these paid-for reports, we will also be publishing highlights from the study on the Devoncroft website.  These articles will be posted on a semi-regular basis, so please check back often.   

You’ll also be seeing information from the 2011 BBS in a wide variety of other industry websites and trade magazines.

The tables below show the product categories and broadcast technology vendor brands covered in the 2011 BBS.

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 Product Categories Covered in the 2011 BBS:

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Broadcast Technology Brands Covered in the 2011 BBS:

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Evertz Q3 Net Income Doubles as Revenue Rises 26 Percent

Broadcast technology vendor financials, Quarterly Results | Posted by Joe Zaller
Mar 08 2011

Evertz Technologies reported that its revenue for the third quarter ended January 31, 2011, was C$83.2m, an increase of 26% versus the same period a year ago, and an increase of 1% versus the previous quarter.

The results were driven by a strong performance in the US and Canada, where revenue was C$48.5m, an increase of 44% versus the same quarter last year, and an increase of 20% versus the previous quarter.  The US and Canada accounted for 58% of the total revenue in the quarter.

International revenue for the quarter was C$34.7m, an increase of 7% versus the same quarter last year, but down sharply from C$42.8m in the previous quarter.  Company management said that Evertz experienced a “high level of quotation activity” in international markets, but implied that international sales had impacted by the recent unrest in the Middle East.

The company’s top 10 customers accounted for approximately 32% of revenue (C$26.6) during the quarter, with no one customer accounting for more than 9% (C$7.5m).  The company had fifty-seven order of more than C$200,000.

Net income for the quarter was C$23.6m, up 102% versus the same period a year ago, and up 13% versus last quarter.

Gross margins for the quarter were 57.5%, up from the 57% gross margins achieved in the same period a year ago, but down slightly from the previous quarter.  Evertz executive VP Brian Campbell said that although the company’s gross margins were impacted by competitive pricing pressure as well as volume discounts on large orders, they were within the company’s target range of 58%-62%.

Research & development cost for the quarter was C$9.6m, an increase of 21% versus the same period a year ago, and an increase of 17% versus the previous quarter.  On the company’s earnings call with equity analysts, Evertz CFO Anthony Gridley said the increase in R&D was due to recent acquisitions (including the purchase of Pharos) and a general increase in R&D headcount.  Evertz says it intends to continue to increase R&D investment.

SG&A for the quarter was C$10.2m, or was approximately 12% of revenue.

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Year to Date

For the first nine months of the year the company’s sales were C$239.4m, an increase of 13% versus the same period a year ago.  Year-to-date revenue from the US and Canada was C$131.1m, an increase of 11% versus last year, while sales from the international region was C$108.3m, a 17% increase versus last year. Gross margins for the first nine months of the year were 57.8% versus 58.5% last year.  Year-to-date net income was C$65m, up 41% versus the first nine months of fiscal 2010.

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New Server and Integrated Playout Products at NAB

Campbell said that Evertz expects there to be a lot of interest in it new server platform and Overture “channel-in-a-box” product at the NAB show in April.  He also said that visitors to the Evertz NAB booth would see the results of the integration of recently acquired technology from Pharos.

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Related Content:

You can read the full Evertz Q3 FY 2011 earnings release here.

The Evertz Management’s Discussion and Analysis (MD&A) filing with Canadian regulators is here (Catchpa code required)

Information on Evertz’s previous quarter results are here.

Information on the acquisition of Pharos by Evertz is here.

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More Broadcast Vendor M&A: Vitec Group Buys Photo Lighting and Accessories Vendor Lastolite

broadcast technology market research, Broadcast Vendor M&A | Posted by Joe Zaller
Mar 08 2011

Vitec announced that it has acquired the entire share capital of Henry Holdings Limited (“HHL”), for a cash consideration of up to £9.75m. HHL is the owner of Lastolite Limited in the UK (“Lastolite”).

Based in Coalville, Leicestershire, Lastolite employs approximately 80 people and is a leading designer, manufacturer and supplier of lighting control accessories and backgrounds for the photo, video and cinema industry. Established in 1986, Lastolite produces highly innovative products for the keen amateur and professional photographer. It is also the owner of the Colorama brand of paper backgrounds.

The Acquisition will complement Vitec’s existing range of Manfrotto lighting supports and LED lights with lighting control accessories, thereby strengthening the Company’s position in this part of the accessories market.

Lastolite will operate as a standalone business within Vitec’s Imaging and Staging Division. Lastolite’s existing senior management, including the Managing Director, Sean Henry, will be retained by the business reporting to the Divisional Chief Executive, Francesco Bernardi.

For the financial year ended 31 December 2010, Lastolite generated audited sales of £8m (of which £1.5m were to Vitec Group entities) and adjusted profit before tax of £1.4m. As at 31 December 2010, Lastolite had gross assets of £3.5m.

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Related Content:

You can read the full press Vitec release here.

Vitec Announces 2010 Results: VideoCom Revenue Falls, Services Post Strong Increase

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Harris Corporation Strategically Realigns Business Segments; Broadcast Communications Rolled into New “Integrated Network Solutions” Unit

Broadcast technology vendor financials | Posted by Joe Zaller
Mar 08 2011

Harris Corporation announced that it has strategically realigned its operating businesses to “provide increased market focus and address the fast-growing global market for integrated communications and information technology and services.”

Under the company’s previous structure, Harris had three operating divisions: RF Communications, Government Communications Systems, and Broadcast Communications.  Under the new structure Harris retains three business units, but has added a new division called Integrated Network Solutions (ISN), which includes the broadcast business.

In addition to broadcast communications, the new ISN segment includes the Harris IT Services, Harris CapRock Communications, Healthcare Solutions, and Cyber Integrated Solutions businesses (all of which were previously part of the Government Communications Systems segment).  

The company says that its new ISN segment will provide IT services, managed services, cyber integration, interoperability, imaging, and digital media management solutions to support government, energy, healthcare, broadcast, and enterprise networks.  It will build on the company’s strengths in established markets, while extending its reach into new markets, including healthcare, energy, cloud computing, sports, entertainment, and retail venues.  

Harris Corp. EVP and COO Dan Pearson has been named acting group president of the new segment. He had this to say about the new ISN business unit: “Commercial businesses and government customers around the globe are increasingly seeking total solutions – combining innovative technology with managed services.  With a flexible technology and managed services approach, Integrated Network Solutions is uniquely positioned to create tailored end-to-end solutions for customers seeking a trusted communications and IT partner.”

Harris says it will begin reporting financial results under the new segment structure effective with its third quarter of fiscal 2011.

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The full Harris strategic reorganization announcement is here.

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Related Content:

Harris Broadcast Business Making a Comeback Thanks to Improved Market Condition and New Opportunities in Digital-Out-of-Home

Harris Says Broadcast Communications Business Improved Significantly in Q2

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Harris Broadcast Business Making a Comeback Thanks to Improved Market Condition and New Opportunities in Digital-Out-of-Home

broadcast technology market research, Broadcast technology vendor financials | Posted by Joe Zaller
Mar 07 2011

Following a seven percent y/y jump in Q2 revenue and “significant improvements” in its broadcast business, Harris Broadcast Communications president Harris Morris said that the company’s broadcast business is making a comeback thanks to improving market conditions and a heightened focus on business growth drivers. 

Morris, who made the comments last week in an interview published by Reuters, also said that the company is pushing its technology into adjacent markets such as digital-out-of-home, even as the core broadcast business continues to improve.

Harris’s broadcast business has suffered over the past few years as media companies have reined in their technology spending in the face of the recession and a depressed advertising environment. 

However, for the first time in a long time Harris Corp, the $5.2Bn conglomerate and parent of the broadcast communications business, touted the improved performance of the broadcast business in their most recent quarterly earnings release.  According to company guidance, the broadcast communications division is projected to breakeven in 2011 on revenue of $520m – $540m.

As the broadcast business rebounds from the recession, Morris says the company will benefit from customers continuing their migration to HDTV operations, particularly in emerging markets such Brazil, Russia, India and China. 

In addition the core broadcast business; Harris is also focusing on new opportunities in adjacent markets, in particular “digital-out-of-home.  The company already counts McDonald’s, Harrods and the Marina Bay Sands casino as customers for its digital signage technology.  Last year Harris announced a deal with the Amway Center, home of the Orlando Magic basketball franchise.  More recently it landed a 10-year, $75m deal with 7-Eleven, which will put Harris digital signage technology into 6,200 retail locations, in conjunction with Digital Display Networks Inc.

This is clearly an area where the company sees continues growth.  “We’re pursuing literally dozens of deals right now across retail, food, entertainment and hospitality and live events venues,” Morris told Reuters.

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You can read the full Reuters article here.

Information about the Q2 results for Harris broadcast communications is here.

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Vitec Announces 2010 Results: VideoCom Revenue Falls, Services Post Strong Increase

Broadcast technology vendor financials, Quarterly Results | Posted by Joe Zaller
Mar 07 2011

UK-based Vitec plc said that its revenue from the broadcast and film markets in 2010 was £121.6m, a decline of 17.3% versus 2009. Taking into account currency fluctuations and the company’s reduced revenue resulting from the sale of Clear-Com to HME, revenue declined by 6.6 percent. 2010 revenue was also impacted by the end its BAS transition contract.

Vitec’s Videocom division includes a dozen brands that serve various parts of the broadcast industry: Anton/Bauer, Autoscript, The Camera Store, Litepanels, Microwave Service Company, Nucomm, OConnor, Petrol Bags, RF Central, Sachtler, Vinten and Vinten Radamec.

Revenue from the company’s services division (primarily equipment rental company Bexel) was £34.3m in 2010, an increase of 30.4% versus 2009, driven by major events including the Winter Olympics.

The company said that the broadcast market improved in all geographies, driven by a recovery in TV advertising and the continued transition to HDTV operations.

The company says that it sees multiple growth opportunities in the broadcast and video market, including:

  • LED lighting, which delivers significant energy saving over traditional lighting
  • Business and industry applications for existing products;
  • Microwave systems (outside the US)
  • Robotics as video production becomes more automated

 

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You can read the full Vitec 2010 earnings press release here.

The Vitec earnings call presentation to financial analysts is here.

Information about Vitec’s results for the first half of 2010 is here.

Information on Vitec’s sale of Clear-Com to HME is here.

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Evertz Revenue and Earnings Decline in Fiscal Q3 2012 Despite Improving International Performance

Broadcast technology vendor financials, Quarterly Results | Posted by Joe Zaller
Mar 07 2011

Evertz announced that its revenue for the third quarter of its 2012 fiscal year was C$71.4m, a decline of 15% versus the same period a year ago, and up 1% versus the previous quarter.

The company’s top ten customers provided 27% of revenue during the quarter, with no one customer accounting for more than 6% (C$4.3m), and the company had 70 orders in excess of C$200,000.

Net earnings for the quarter were C$12.7m (C$0.17 per share), down 48% versus the same quarter last year.

The results for the quarter were below the expectations of equity analysts, who on average were looking for revenue of C$78.8m and EPS of C$0.24.

Revenue in the US/Canada region was C$32m, or 45% of total revenue, down 19% versus the same period a year ago, and down 11% versus the previous quarter.

International revenue was C$39.4m, an increase of 11% versus last year, and an increase of 14% versus last quarter.  When asked about the company’s international performance, Evertz EVP Brian Campbell attributed the growth to the increasing demand for the company’s products in international markets as a result of the ongoing worldwide transition to HDTV operations, the rebound in some international markets, and the fact that that Evertz had been able to “refocus its resources” where needed thanks to its flexible sales structure.

Gross margins in the quarter were 56.2%, down from 58% last year and down from 57.3% last quarter.  The company attributed the decline in gross margins to a different geographic and product mix in the quarter, particularly the lower sales performance in the US market where margins for some products are higher.

R&D expenses in the quarter were C$11m, an increase of 15% versus the same period last year.  On its conference call with equity analysts Evertz CFO Anthony Gridley attributed the rise in R&D spending to the timing of expenditure for prototyping materials, which increased during the quarter.  Gridley also said that the company will continue to increase its R&D investment, and that a run-rate of approximately C$11m per quarter should be considered normal.

SG&A expenses for the quarter were C$12.7m, an increase of 27% versus last year. Selling and administrative expenses represented approximately 17.7% of revenue in the quarter.

Capex was up sharply to C$10.9m, due primarily to the purchase of a new airplane for approximately C$9m during the quarter.  The company said it is in the process of retiring the existing airplane that it already owns.

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Year to Date Performance:

Revenue for the first nine months of fiscal 2012 was C$217m, down 10% versus last year.

Year-to-date US and Canada revenue was C$113.2m, down 14% versus the previous year.  Year-to-date revenue in the international region was C$103.9m, down 5% versus the previous year.

Gross margins for the first nine months of the year were 57%, down from 58% last year, but still within what the company’s targeted range.

 

Outlook:

The company said that it expect its revenue for the second half of the current half of the fiscal year to exceed the first half of the year, and that it should grow faster than the overall market over the next several years.

Campbell said that Evertz is entering the fourth quarter and the upconing NAB trade show with strong momentum.  The company’s purchase order backlog at the end of February 2012 was in excess of C$42m and shipments during the month of February 2012 C$26 million.  In the past the company typically turned its PO backlog into sales in 4-6 weeks, but Campbell said that more recently the conversion time between orders and sales had increased, and that some of the company’s current backlog will take longer to convert into sales.

 

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Related Content:

Press Release: Evertz Technologies Reports Results for the Third Quarter Ended January 31, 2012

Previous Year: Evertz Q3 2010 Net Income Doubles as Revenue Rises 26 Percent

Previous Quarter Press Release: Evertz Technologies Reports Results for the Second Quarter Ended October 31, 2011

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© Devoncroft Partners. All Rights Reserved.

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More Broadcast Vendor M&A: EVS Sells XDC CineStore Digital Cinema Technology to Barco

Broadcast technology vendor financials, Broadcast Vendor M&A | Posted by Joe Zaller
Mar 04 2011

Less than two weeks after Reuters reported that Barco is “seriously considering” new acquisitions to boost its growth, the Belgium-based projection vendor announced that it has acquired the CineStore activities of cinema solutions provider XDC.

Broadcast production and playout server vendor EVS is the majority shareholder in XDC.  

Terms of the deal were not disclosed.

This is perhaps not a surprising move for Barco, which recently announced strong financial results, driven in large part by the global expansion of digital cinema.  The company appears to be seeking to leverage its recent D-Cinema projection sales success into a more integrated provider of complete D-Cinema solutions.

Indeed, Barco says the acquisition will help it “move up in the value chain from digital projection supplier to provider of total cinema visualization solutions,” and that the CineStore team brings profound software knowhow and in-depth market knowledge of the digital cinema business.

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XDC’s CineStore products include:

  • Solo G3: a hybrid digital cinema server offering both JPEG 2000 and MPEG-2 play-back capabilities. It is used as Screen Management System (SMS). 

 

  • Audi: a system for digital to analogue conversion, external analogue audio source inputs and high quality signal isolation.

 

  • Plaza: a hardware and software suite that enables to fully manage a cinema multiplex from a single point.

 

Barco’s VP of Digital Cinema Wim Buyens said that adding CineStore’s skills and experience to Barco’s business will allow it to strengthen its market position.  However he added that the company is not seeking to become an integrator (and compete with its existing distribution channel). “We stand by our strategy not to be a VPF integrator. Instead, we will remain focused on supplying visualization technologies and products for the professional digital cinema community,” said Buyens. 

The acquisition of CineStore activities will be closed by the end of Q1 2011. 

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You can read the full Barco press release here.

Information about CineStore’s products is here.

Information about Barco’s Q4 and full year 2010 results is here.

The Reuters article about Barco’s M&A plans is here.

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ViewCast Claims Strong Growth in Q4 2010, Provides Positive Outlook for 2011

Broadcaster Financial Results | Posted by Joe Zaller
Mar 04 2011

ViewCast which returned to profitability in the third quarter of 2010, announced it had a strong Q4 and expects to “continue significant growth” in 2011.

No financial details were released as part of the announcement.

Company president and CEO Dave Stoner said that he believes the company is “on track to enjoy the best year for digital media product sales in ViewCast’s history.”

Stoner’s positive outlook for 2011 is based on a variety of market and other factors.  He said, “The data we see on emerging customer activities indicates that we are returning to a solid base with more normal seasonal purchasing patterns.  That indicates to us another strong year of growth with the first quarter showing the least strength as annual plans take shape, followed by steady growth in the balance of the year as those customer plans are executed. We also anticipate the kick-off of at least one new large customer relationship in the first half of 2011 reinforcing that pattern.”  

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 You can read the full ViewCast announcement here.

Information about ViewCast’s Q3 2010 results is here.

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